NEW YORK (CNNMoney.com) -- Toyota Motors will invest $50 million in electric car maker Tesla, the companies announced Thursday, and form a partnership aimed at developing new technology.
Tesla also announced plans to purchase a plant owned by Toyota in Fremont California, which had been operated as a joint venture between General Motors and Toyota.
Toyota said it has agreed to purchase $50 million of Tesla's common stock issued in a private placement. The deal will close immediately after the completion of Tesla's currently planned initial public offering.
"By partnering with Tesla, my hope is that all Toyota employees will recall that 'venture business spirit,' and take on the challenges of the future," Akio Toyoda, the company's president, said at a press conference in California.
In addition, Toyota said it plans to work with Tesla to develop electric cars and parts. The companies will also collaborate on production systems and engineering support for electric vehicles, according to a joint statement.
"It is an honor and a powerful endorsement of our technology that Toyota would choose to invest in and partner with Tesla," said Tesla chief executive and cofounder Elon Musk.
The Fremont plant, called the New United Motor Manufacturing, or NUMI, is where GM made the Pontiac Vibe, while Toyota built Corollas and Tacoma trucks.
Elon said Tesla will only purchase "a small portion" of the NUMI plant. But he added that the company hopes to expand in the future.
Toyota stopped all production at the plant in April, eliminating 4,700 workers. GM killed off the Pontiac brand as part of its reorganization last year, ending production of the Vibe.
Gov. Arnold Schwarzenegger said the partnership will create 1,000 new jobs in California, which currently suffers one of the highest unemployment rates in the country.
Tesla Motors had been searching for a location at which to produce its planned Model S electric sedan, which is slated to go into production in late 2011.
The Model S is designed to seat up to seven people and is expected to cost about $58,000. It is supposed to be a more accessible, less expensive car than Tesla's current offering, the Tesla Roadster, a two-seat sports car with prices starting at over $100,000.
Tesla Motors, based in Palo Alto, Calif., received $465 million in loan guarantees from the federal government last year as part of a program designed to assist with the development of advanced technology vehicles. The money was to be used to assist with the development of the Model S.
-- CNNMoney.com senior writer Peter Valdes-Dapena contributed to this report. 
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